Inspire 2019: Decision to end internal user rights based on cost concerns, says Microsoft channel exec

Gavriella Schuster, Microsoft corporate vice president, One Commercial Partner | Source

Microsoft's decision to end internal use rights for partners stole some of the headlines in the leadup to Inspire 2019, the annual partner conference.

As part of the Microsoft's media efforts around Inspire, corporate vice president for Microsoft's One Commercial Partner group, Gavriella Schuster addressed the decision and its implications in a press briefing.

Schuster explained how Microsoft came to the realization and made the decision in a new briefing ahead of Inspire 2019:

As we moved into cloud services, we didn't really think through that very much until recently when the bills were getting very big. There is real COGS, a substantial amount of real COGS in that. So it was like, wow if your partner ecosystem with 7,000 new partners per month continues to grow like this, we can't afford this. So we had to figure out how do we help our partners to utilize the products so they can sell them – demonstration purposes, training, proof of concept, dev-test environments, but we can't afford to run every single partner's organization around the world anymore because it's not free.

Schuster remarked that her first job at Microsoft in 1995 was to build a global solution provider program. One of the benefits at the time was to offer use rights as a way to encourage adoption of the product. At that time, she said, use rights were nearly free, given that the partner would be provisioning the hardware, doing the installation, and maintaining the systems. But in a cloud-first world, things have changed, leading to the recent announcement that partners will have to pay for Microsoft software in the cloud, just like their customers.

While the impact of the change is not fully understood, partners have remarked anecdotally that revoking IURs will cost anywhere from thousands to tens of thousands of dollars per month.